Anonymous wrote:

Anonymous wrote:This is a no-brainer. You do not pay off the mortgage. That is a very middle class way of thinking.

Totally agree. Paying off your mortgage is only for middle-class rubes. Smart people make sure to dump all their cash into the stock market when valuations are at historic highs, higher, especially, than in the pre-Depression 1929 period. You've heard of the famous saying, "Buy high and sell low," right??

Wow. You’ve made it very clear you don’t know anything about investing. You are exactly the type of rube who hyperventilates about debt and thinks mortgages are the devil and we are always on the precipice of a total economic meltdown. (As if the best thing to do in an economic meltdown is have a huge chunk of your net worth tied up in a house, which now has lost value and can’t be leveraged as much).

cash is king and in this example cash invested in index funds are king. The way you maximize cash is through leverage. The lowest risk, highest LTV a leverage you can get is on real estate.

If you are nervous about valuations, take out a few 3-18month CDs and invest them gradually in index funds as they mature.

Anonymous wrote:

Anonymous wrote:This is a no-brainer. You do not pay off the mortgage. That is a very middle class way of thinking.

The rich don't have mortgages my friend. There is plenty of $$. No need to scrimp. You have a poor mans mentality.

This. Or they pay them off early and don’t care like we did. Why? Because we are well-off.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Paying off a mortgage sounds good but it's actually not.

We did ours and it was great.

This is just so incredibly stupid.

We have over $6 million in investments and a $600,000 mortgage at an interest rate that’s even lower than OP’s. We could literally pay the mortgage off tomorrow. Are you seriously advising us that that would be “great?”

We have way more than 6m and paid off our mortgages (2 houses) early. Don’t see a difference and glad we are done. 😁

Anonymous wrote:No one is taking into account the peace of mind and psychological impact of having a paid off mortgage and owning your house outright. Yes it doesn’t make practical, logical sense to pay off a 3% mortgage. But the feeling you get can’t be discounted and has some intangible value.

I feel like if I paid off my mortgage id be in constant fear that my house burns down and insurance refuses to pay for it due to a technicality and all my money put in it is lost.

No one is taking into account the peace of mind and psychological impact of having a paid off mortgage and owning your house outright. Yes it doesn’t make practical, logical sense to pay off a 3% mortgage. But the feeling you get can’t be discounted and has some intangible value.

Anonymous wrote:

Anonymous wrote:This is a no-brainer. You do not pay off the mortgage. That is a very middle class way of thinking.

Totally agree. Paying off your mortgage is only for middle-class rubes. Smart people make sure to dump all their cash into the stock market when valuations are at historic highs, higher, especially, than in the pre-Depression 1929 period. You've heard of the famous saying, "Buy high and sell low," right??

Yea I’ve heard that a lot in the decades and decades that I’ve invested and it hasn’t stopped me from becoming a millionaire several times over. It’s about the long term, bozo. Nobody is suggesting you become a day trader.

Will you be applying for college financial aid? If so, many schools don’t count home equity but do count money/financial assets in non-retirement accounts.

If you payoff the home, you have both peace of mind and an increased chance of financial aid.

You might want to run several net price calculators on college websites of schools that interest your kids and try various inputs to see if different approaches to allocating your windfall make any difference for financial aid.

Anonymous wrote:Op here. Thanks for the (mostly) helpful advice. My concern is that if we have a large fund that doesn’t have withdrawal penalties we’ll just spend it rather than make the compromises we’ve been making for the last 30 years. The only reason that we have so much in retirement savings is that neither of us can stomach the penalties that we would have to pay if we raided it.

And that is a VERY VALID reason for paying off the mortgage and then investing a portion of your mortgage payment.

Because yes, while technically it's "best" to take a 3% mortgage and invest everything else, that only works if you make over 3% AND you invest it, not spend it. Fact is most people would tend to spend a part of it, that is why so many are in debt, hit retirement and cannot afford to retire, etc. Most people don't do what is ideal to do financially. Therefore, it is a guaranteed rate of return to pay off the house and no longer have a mortgage payment. Then you will hit retirement without a mortgage (and can possibly downsize if desired and have more $$$ to spend if needed)

Anonymous wrote:

Anonymous wrote:This is a no-brainer. You do not pay off the mortgage. That is a very middle class way of thinking.

Totally agree. Paying off your mortgage is only for middle-class rubes. Smart people make sure to dump all their cash into the stock market when valuations are at historic highs, higher, especially, than in the pre-Depression 1929 period. You've heard of the famous saying, "Buy high and sell low," right??

That's not the only choice. OP could put the money into FDIC-insured vehicles like savings accounts and CDs that still pay more than her mortgage, and have the money available if she ever needs it to put towards the mortgage in the future.

Also, having the kids get jobs and then contributing to their Roth IRAs is a fairly safe investment, given that the amounts are relatively low (max $21k/year and likely much less) and they have 50+ years to wait for retirement.

Anonymous wrote:This is a no-brainer. You do not pay off the mortgage. That is a very middle class way of thinking.

Totally agree. Paying off your mortgage is only for middle-class rubes. Smart people make sure to dump all their cash into the stock market when valuations are at historic highs, higher, especially, than in the pre-Depression 1929 period. You've heard of the famous saying, "Buy high and sell low," right??

How many years left on your mortgage?

Wouldn’t you already “spend it” once you pay off your mortgage by taking that money and spending it on short term things? Not wise to pay off mortgage at that rate.

I recently came into a windfall and since I haven’t had money, I met with a CFP who created a financial plan (and forecasts) for us based on our goals. It was so helpful in understanding how that money can really set up our whole family for success (comfortable retirement, college paid off, etc.) and maybe even our grandkids. I suggest meeting a fiduciary CFP to create a plan. Ours also manages our money because I knew I wouldn’t be as on top of it as I should. They’ve already helped us significantly. I wouldn’t pay off the mortgage, I’d invest in the 529s to get full tax benefits every year, open a backdoor Roth and put the rest into a mix of bonds, international and US stock index funds (research Bogle’s three fund portfolio)

Anonymous wrote:Op here. Thanks for the (mostly) helpful advice. My concern is that if we have a large fund that doesn’t have withdrawal penalties we’ll just spend it rather than make the compromises we’ve been making for the last 30 years. The only reason that we have so much in retirement savings is that neither of us can stomach the penalties that we would have to pay if we raided it.

You still shouldn't pay off such a low mortgage. If you need to impose penalties on yourself, then:
- Do a backdoor Roth for you and your husband (14k total per year) and open and fund Roth IRAs for your three teens if they have earned income (21k total per year). Those will have actual penalties for early withdrawal.
- Max out your HSA. Penalties for non-healthcare withdrawals.
- Get your 529s in shape for twelve years of college, if that is expected. Penalties for non-education withdrawals, except for the 35k Roth IRA transfer once the accounts have sufficiently aged.
- INVEST the remainder in a brokerage account. Having to pay short-term gains versus capital gains is in essence a >10% "penalty" for withdrawing quickly/rashly.

Anonymous wrote:

Anonymous wrote:You know yourself best. If keeping that much $$ is going to tempt you into spending habits that you don't want, then paying off your mortgage is the smarter choice.

You could pay off your mortgage then set up an automatic monthly transfer of an amount just under your old mortgage payment into to an investment account. And then don't touch that account until you really need it.

Op here. That’s a great option - my plan would be to push the old mortgage payment into the 529s.

Why don’t you not pay off the mortgage and instead use the windfall to fund the 529s?